Planning and Managing Warehouse OperationsPresented by Douglas Smith
• 22 Years Experience in Distribution and Logistics
• Key Metrics, Planning and Managing WarehouseOperationsYou'll learn how to leverage your order data tochoose the most effective distribution model whileimproving the customer experience and reducingoverall logistic costs. Tools to be discussed includegreen field transportation analysis, shipmentmetrics and service level requirements, workbreakdown structure and facility throughputanalysis, and choosing the right metrics formaximum benefit.
• Definition: A measurement of a system or process thatprovides a clear and concise vision of issues andopportunities.• Metrics need to be aligned directly to:• Current Business Strategy• Financial Performance• Long Term Corporate Goals• Corporate Marketing Message• Metrics must be as real time as necessary to drive theexpected performance within the organization.
StockingEfficiencyLogisticsEfficiencyOperationallyEfficientMeeting BudgetRequirements(cost per order)Pick &PackEfficiencyExceeding CustomerExpectations(Order delivery cycle)ReceivingEfficiency
ReceivingEfficiencyCartons per hourPieces received per labor hourAverage lines per POAverage pieces per POStockingEfficiencyOrders per replenishment lineReplenishments completed per labor hourAverage days of demand in pick locationsInventory accuracy in pick locationsPick &PackEfficiencyLogisticsEfficiencyOrder AccuracyAverage lines and picks per orderLines and picks per labor hourPackaging cost per orderCost per packageCost per PoundAverage package weightAverage destination zone
OrganizationalPerformanceDC PerformanceKey Area PerformanceTeam PerformanceIndividual Performance
• Order Picking• Pick up a batch of orders – 15 seconds• Sign out batch – 5 seconds• Review orders – 25 seconds• Obtain cart – 30 seconds• Set up cart – 20 seconds• Move to first pick – 35 seconds• Verify location – 3 seconds• Verify product – 7 seconds• Verify quantity – 15 seconds• Pick product – 5 seconds• Place product in cart – 4 seconds• Pick additional quantity – 2 seconds• Read next pick location – 5 seconds• Move to location – 25 seconds• Correct mis-pick – .02 seconds• Deliver cart to packing area – 45 seconds
• Improving the Order Turn Around Time MetricOrderOrderOrder FulfillmentEntryDelivery1 Day 6 Days6 DaysSuccess!OrderOrderOrder30%EntryFulfillmentDeliveryReduction1 Day 2 Days6 DaysOrder Entry3-4 DaysEDI IssuesProcessing IssuesOrderFulfillment2 DaysNo OwnershipOrder Delivery20-27 Days2 days domestic logistics5 Days at freight forwarder15 days in Customs5 Days at 3PL receiving
• Document expected outcome• Create detailed task requirements• Verify start and end points of metric• Establish baseline performance – establish goal• Communicate new metric to team and management• What, Why, Gaps, End State if goal is achieved• Develop reporting structure and timing• Sit back, eat popcorn, and watch the magic happen • Once metrics are established, using Benchmarking helps toverify your performance!
General Benchmarking ResultsParticipating CompaniesNetworks and ServersFinancial EquipmentConsumer ElectronicsIndividual names not identified in thedocument for confidentiality purposes
KPI benchmarking shows us performing well on several dimensions, yet,there are also areas with opportunity for improvement$ value ofinventoryNumber ofSKU’s inInventoryUS$2 Mil$66.7 Mil $97 Mil$510 MilAvg26,0002000 100,000AvgUSLower inventorylevels than othercompanies with likesalesMuch higher SKUcount than othercompany’s avg salesper SKU $5500 oursis $1680First PassFill RatesOther widgetcompanies80%92.9 % 94.5%99.6%AvgUSSubstantially leadingthe other Widgetcompanies in fill ratesPartRetentionLengthUS3 years6.5 years 7 years10 yearsComparable withmost companies onretention period.
KPI benchmarking shows us performing well on several dimensions, yet,there are also areas with opportunity for improvementCost ofparts usedlast year$5.7 Mil$143 MilAvg6.5 yearsAvgUS$168 Mil$965 MilAll of thesemetricscontribute toinventory usage.Inventoryturns.562.27 AvgUS2.524.43Although totalsales toinventory cost iscompetitive weneed to set ourturn target at 3,or 4 months onhand.Monthson hand2.71US4.765.28 Avg21.43This will place atus as a frontrunner with highSKU countcompanies
Q#10 - What are the Other Respondents TopProjects for 2007 & 2008CompletedBy US1 Integrate computer systems and processes globally so all units can be coordinated 20082 Improve technology and algorithms for optimum cycle times, stocking and replenishment,while evaluating risks to reduce costs3 Allocate warranty cost to the proper owner instead of service covering all costs4 Design parts for serviceability to include diagnostics, failure codes and quality5 Establish service parts distribution centers in Europe and Asia6 Expedited parts distribution network 20087Lead time reductions8 Minimize scrap by forecasting inventory reduction as product approaches end of life9Out-tasking of non-core activities 200810 Push more inventories to vendor-managed and partnerships with same-day providers 200811 Repair cores and de-manufacture equipment 200812 Return defective parts direct to primary repair vendors13 Supplier performance managementMRP?